Kokuyo Camlin downgraded to 'Strong Sell' due to weak fundamentals and underperformance

Kokuyo Camlin, a smallcap company in the printing and stationery industry, has recently been downgraded to a 'Strong Sell' by MarketsMOJO on November 18, 2024. This downgrade is due to the company's weak long-term fundamental strength, as evidenced by its operating losses and poor growth in net sales and operating profit over the last five years.
In addition, the company has recently declared negative results for the September 2024 quarter, after two consecutive positive quarters. The PAT (profit after tax) has fallen by a significant 201.9%, while net sales have also seen a decline of 14.8%. The PBDIT (profit before depreciation, interest, and taxes) has also reached its lowest point at Rs -7.61 crore.

One concerning factor is that despite its size, domestic mutual funds hold a mere 0% stake in the company. This could indicate that they are not comfortable with the company's current price or its business.

Furthermore, Kokuyo Camlin has underperformed the market in the last year, with negative returns of -7.22% compared to the market's 23.90% returns. The technical trend for the stock is currently sideways, with no clear price momentum, and has generated negative returns of -10.92% since the downgrade on November 18, 2024.

However, the company does have a fair valuation with a ROCE (return on capital employed) of 10.7 and an enterprise value to capital employed ratio of 4.3. It is also currently trading at a discount compared to its average historical valuations. Despite this, its profits have fallen by 46.2% over the past year, while the stock has generated negative returns.

In conclusion, the downgrade to a 'Strong Sell' by MarketsMOJO for Kokuyo Camlin is based on its weak long-term fundamentals, recent negative results, and underperformance in the market. Investors should carefully consider these factors before making any decisions regarding this smallcap company in the printing and stationery industry.